I’ve used Google’s Bard AI tool to help identify blockchain stocks for the remainder of this month. Blockchain stocks are a sector that has moved in and out of favor as crypto prices have ebbed and flowed. This has led to the rise of AI recommended blockchain stocks.
Bitcoin (BTC-USD) dominates the cryptocurrency and as it goes, so goes everything else in the space. BTC prices have recently peaked above $30k and look likely to stay there. Rising tides are raising all ships once again.
Thus, blockchain stocks are in a position to move higher as activity again increases. And with the help of Bard, I’ve identified a few shares worth considering therein offering you, the reader, my take on Bard’s advice.
Me: Hi Bard, I am writing an article titled “3 Blockchain Stocks That AI is Loving in July” Do you have any recommendations?
Nvidia (NVDA)
Bard: “NVIDIA is a leading semiconductor company that is known for its graphics processing units (GPUs). GPUs are essential for blockchain mining, and NVIDIA is one of the few companies that can produce GPUs at scale. As the demand for blockchain mining continues to grow, NVIDIA is well-positioned to benefit.”
As Bard notes, Nvidia (NASDAQ:NVDA) is one of the more prominent stocks in connection to the growth of blockchain mining. Bard even goes so far as to suggest that Nvidia is well-positioned to benefit from continued growth in the sector. This makes it one of those AI recommended blockchain stocks to buy.
I agree with the first part of Bard’s statement. Nvidia is indeed well-positioned. The company has been on a tear this year due to the fact that it produces the most powerful chips which have high demand in AI applications. Currently, there simply are no their firms that can do what Nvidia does.
But the second part of Bard’s argument, that Nvidia will continue to benefit from being well-positioned in blockchain mining seems suspect. Nvidia CTO Michael Kagan has been openly critical of blockchain mining and has stated that his company’s chips are better suited to more worthwhile endeavors, specifically AI. The company even artificially constrained its chips via software so that they would be less useful for the purpose of mining Ethereum (ETH-USD). So, while I agree that Nvidia is a great stock I disagree with Bard that Nvidia is well-positioned in relation to blockchain.
Marathon Digital Holdings (MARA)
“Marathon Digital Holdings is a bitcoin mining company that owns and operates a fleet of miners. The company’s miners are powered by renewable energy, which makes it one of the most environmentally friendly Bitcoin miners. Marathon Digital Holdings is also one of the largest bitcoin miners in the world, and it has a strong track record of profitability.”
Again, Bard’s take regarding Marathon Digital Holdings (NASDAQ:MARA) stock raises similar questions about some of its assertions about the company. I’ll get to that in a minute but first I do want to note that AI has a legitimate reason to love mining firms currently: Bitcoin is above $30k so if you mine more you should be able to earn more. In short, there’s reason for Bard and the market, in general, to be optimistic about blockchain mining stocks.
What irks me is that Bard claims Marathon Digital Holdings has a strong track record of profitability. It does not. Profitability is a bit of a vague, catch-all term that encompasses metrics related to several ratios. Basically, profitability is making money, not losing it. This makes it one of those iconic AI blockchain recommended stocks.
And unfortunately, Marathon Digital Holdings lost $7.24 million during the first quarter. A year earlier it lost $12.85 million. That makes it a bit difficult to trust Bard’s take overall.
Riot Blockchain (RIOT)
“Riot Blockchain is another bitcoin mining company that owns and operates a fleet of miners. The company’s miners are also powered by renewable energy, and it has a similar track record of profitability as Marathon Digital Holdings. Riot Blockchain is one of the most well-capitalized bitcoin miners, and it has a large pipeline of new miners that are expected to come online in the coming months.”
Riot Blockchain (NASDAQ:RIOT) was recommended as another blockchain mining stock due to its profitability. Let’s start there.
It wasn’t profitable during the first quarter. Instead, Riot Blockchain lost $55.69 million on just $48 million in Bitcoin mining revenues. A year earlier Riot Blockchain was profitable, though, posting $36.6 million in gains on $57.95 million in Bitcoin revenues. Perhaps Bard’s data didn’t account for the most recent quarter. That’s one of the main bugaboos of AI at this point: data is often times outdated.
However, Bard also claimed Marathon Digital had a track record of profitability even though it didn’t a year ago. That’s a problem in the stock market because recency is a major, major factor in the analysis.
Anyway, Riot Blockchain was dealing with prices that nearly halved during the first quarter on a year-over-year basis, falling to $22,704 on average. The company did secure a significant number of mining machines which does give reason to be optimistic. Bard was right about that.
